In late 2017, JLL published a study that put into perspective just how expensive it had become to rent office space in Uptown. With average rents at $51.17 per square foot then, McKinney Avenue ranked as the 14th priciest street in the U.S.
Fast forward two years, and prices have yet to fall off. Although JLL hasn’t updated its streets data, research from the first few months of the year indicates that Uptown/Oak Lawn office space is going for an average of $47.82 per square foot, with some at the upper end touching as high as $60 per square foot. If you ask the experts, the city’s urban core is seeing some of its most consistent market growth ever.
“We’re still pretty affordable here, but from a tenant perspective the rental rate increases have been shocking,” says JLL Dallas Research VP Walter Bialas.
Although Uptown remains far and away Dallas’ most expensive place to put your business, high rents have started to spill over into downtown, as well. Average rates for something best-in-class in downtown run in the mid $40s per square foot, says Bialas. “That gap has closed tremendously,” he says. (He also points out that the growth isn’t all about office space—there have been residential gains here, as well.)
One reason: Klyde Warren Park blurred the lines between the two neighborhoods, serving as a catalyst for growth across Woodall Rodgers. The ability to charge more for rent has allowed the owners of downtown buildings to pursue redevelopment projects, ranging from HVAC and elevators to office space and lobby work.
Uptown’s buildings are newer and built for multiple tenants, but in downtown, many towers need updating. Redevelopment projects have further driven up prices, says Bialas.
Even with space available in downtown buildings with lower rents, demand remains strong for the top of the line. The Dallas Morning News reported in April that, thanks to a 12-month lull in which no new construction projects started up, Uptown and downtown’s new buildings are all likely to be filled by the time the city sees another project built up and ready to go. The News reported that office space in new developments the Union and PwC Tower are at 90 percent and 85 percent occupancy, respectively.
Developers could see in those occupancy and rent rates an opportunity. Which means Dallasites could see more cranes.
“This is the first time in our history, at least as far back as we can go, that we’ve seen consistent, high-rent growth across the board in all the Class A buildings, and even the better B buildings,” says Bialas.